In molecular evolution, few protein families have achieved the adaptive success of the lipocalins. By virtue of their ability to bind a variety of small hydrophobic ligands, the lipocalins are implicated in a bewildering array of biological functions including vision, olfaction, taste, sleep-wake regulation, sperm maturation, pregnancy and the menstrual cycle, morphogen transport and embryogenesis, viral infection, the immune response, free radical scavenging, photoprotection, camouflage coloration and senescence. The lipocalins are small (about 160 residue), secretory proteins whose structural motif is a "beta clam" composed of eight antiparallel beta strands arranged as two orthogonal beta sheets (refs). The space between these sheets forms a ligand binding pocket of roughly 20 x 10 x 10 angstroms. Although the precise nature of the ligands is known with certainty in only a small number of cases, lipocalins have been observed to bind retinoids, steroids, carotenoids, bilins, prostaglandins, "odorants" and a variety of drugs. Some of the lipoca-lins are glycoproteins, some are membrane-associated, and some may have specificreceptors. Lipocalins have been observed as monomers, homo-oligomers and in complexes with other proteins. Until 1991, lipocalins were thought of as passive carriers of their ligands. Then we discovered that one of the family members was actually an enzyme, i.e. glutathione-independent prostaglandin D synthetase (PGH2 D-isomerase, EC 5.3.99.2). PGD synthase is expressed in the mammalian central nervous system where it catalyzes the conversion of PGH2 to PGD2. PDG2 in turn is the major sleep-inducing substance in the mammalian brain. We have developed a detailed 3-dimensional model of PGD synthase, based on the crystal structure of a related lipocalin, retinol-binding protein. This model reveals how a single amino acid substitution can convert an inert carrier protein into an enzyme. Details of the binding pocket-ligand interactions may lead to rational design of new pharmaceuticals to inhibit or enhance sleep induction.